Can Germany afford to say 'nein' to eurozone plan?

The symbol of the European common currency, the euro, stands before the headquarters of the European Central Bank in Frankfurt am Main, Germany.

KAI RYSSDAL: You know how analysts always say the markets hate uncertainty? I'm not sure German Chancellor Angela Merkel got the memo. She said in an interview last night that the terms of the EU's Greek rescue might have to be renegotiated. Not the most calming of things to say as the German parliament gets ready to vote on a big bailout package tomorrow and Friday.

The economic hand-wringing to date has largely been about European economic stability. But Marketplace's Stephen Beard reports from Berlin, it's really about something more fundamental: the money in people's pockets.


STEPHEN BEARD: This pacemaker manufacturer must be having palpitations. The boss, Christoph Bohmer, is getting alarmed about the euro crisis because the currency has been great for his business.

CHRISTOPH BOHMER: We do the majority of our business in the eurozone and with the euro, there's no currency risk in that eurozone. That's been of incredible help.

BEARD: So you like the euro?

BOHMER: We absolutely do like the euro.

Seventeen countries -- with a combined population bigger than the United States -- have adopted the euro. The currency has turned these countries into a giant playground for Germany's all-powerful exporters.

Philip Schlotboller is with the German Chambers of Commerce.

PHILIP SCHLOTBOLLER: We have a common market with one single currency and without any transaction costs: The export from Germany to France or to Slovakia is the same as an export from New York to Texas or to California.

Since the euro was launched 12 years ago German exporters have done well for a less obvious reason. The old Deutsche Mark would likely be much stronger than the European currency. So Germany has kept its products priced competitively on the world market. This might explain the Greek prime minister's very respectful hearing in Berlin yesterday when he addressed a group of German business people.

GEORGE PAPANDREOU: I promise you that we Greeks will soon fight our way back to growth and prosperity after this period of pain.

If George Papandreou's audience had been made up of the German public, it might not have applauded. Eighty percent oppose the transfer of any more money -- especially to Greece.

But political scientist Henrik Enderlein says business and political leaders in Germany now face a stark choice.

HENRIK ENDERLEIN: What's more costly? Transfers to Greece and potentially other countries today, or accepting the costs of a failure of the euro area?

The costs of a euro collapse could be horrendous. The whole region could be plunged into turmoil, says German economist Katynka Barysch.

KATYNKA BARYSCH: There would not be only a massive run on all European banks, there would be a collapse in exports, there would be a deep, deep recession. The economic losses would be exponential.

Germany would be especially hard hit. Its banks having lent an estimated $1.5 trillion to Greece, Spain, Portugal, Ireland and Italy. If Germany reverted to the Deutsche Mark, that currency might soar and in the process cripple German exporters. Most analysts say the German parliament will pass the bailout package tomorrow.

Choir singing "Land of Hope and Glory"

Twelve years ago when the euro was launched a multinational choir sang "Land of Hope and Glory" outside the European Central Bank in Frankfurt. This now has a hollow ring. There doesn't seem much hope or glory in euroland today.

In Berlin, I'm Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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